Small Firms Business Inititiative

[sparklyscotty]

Hi there. Does anyone have any experience with the government underwritten Small Firms Loans? I need a business loan of £5,000 and many banks say that it would have to be a personal loan due to the low current turnover of my business. (I just opened in February) Hoewever, I don't have any credit history in this country because I recently moved back from the US, so it HAS to be a business loan. The Small Firms Loan looks good but a bank advisor has said that it is actually quite expensive. Help!
-Angel-

[james constant FCCA]

Hi

your bank (like others) do not particularly like the Government Small Business Loan Guarantee Scheme as it has been designed to help new or existing business with little or no security to develop. The facts are that the Government guarantees 75% and in return the Bank charges a slightly higher interest rate.

My suggestion is to try different banks but, to have better chance, you should approach them with a properly thought and compiled business plan and financial projections. This shows that you know what you want to achieve and how you will achieve it.

FREE Weekly Tax Tips for the small business owner written in understandable language.

[Strategist]

SFLG is for companies that wish to borrow when all company and personal assets (of the Directors) have already been pledged as security, or where none exists. There is not a higher interest rate but there is a premium c2% of the outstanding balance payable to the DTI in order to underwrite 75% of the outstanding balance. For a sum of £5,000 (which these days can be borrowed on a credit card!) it is hardly worth the paperwork. A lot of high street bank branches do shy away from from SFLG despite ALL major and many minor banks participating in the scheme. I would suggest just approaching your own bank first and if they say no, look for a soft loan scheme through a local enterprise agency. I am sure that Scottish Enterprise could advise on these.
I hope this helps.

[finstar]

Depending on what you need the capital for, a business loan may not be the answer.

What exactly is it that you will be doing with the capital?

[sparklyscotty]

Basically i have used my credit card for all of my business start up expenses and am looking for a better way to pay it off. It looks like the best way may be to get an overdraft on my business account and borrow from that.
-Angel-